DELSA/GOV 3rd Health meeting - Tamas EVETOVITS


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This presentation by Tamas EVETOVITS was made at the 3rd Joint DELSA/GOV Health Meeting, Paris 24-25 April 2014. Find out more at

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DELSA/GOV 3rd Health meeting - Tamas EVETOVITS

  1. 1. Division of Health Systems & Public Health Fiscal sustainability and sustainable public financing for health Dr Tamás Evetovits Sr Health Financing Specialist & Head of Office a.i. WHO Barcelona Office OECD meeting of the Joint Network on Fiscal Sustainability of Health Systems, 24-25 April 2014
  2. 2. Let’s get the concept and the objectives right Reality check on health spending and its fiscal impact Sustainable public financing for health Outline
  3. 3. An accounting exercise or a matter of choice in public policy priorities and finding the right instruments to minimize adverse effects on health, equity and financial protection? Fiscal sustainability of health systems
  4. 4. Fiscal sustainability is meaningless if not linked to public policy objectives • Fiscal sustainability should not be seen as a policy objective worth pursuing for its own sake… • …if it was an objective, then a simple cost cutting exercise would do the job… • … and both equity and efficiency would suffer • Fiscal sustainability should be treated as a constraint that has to be respected by all sectors of public financing • Continual increase of government debt is bad policy and not in the interest of future generations… • …because both equity and efficiency would suffer
  5. 5. Fiscal sustainability: a slippery concept • It applies at the level of overall public spending (overall fiscal balance) • At a sectoral (e.g. health) level, the concept is less clear – How much gets spent depends on a country’s overall fiscal context and the priority that government gives to each sector in its budget – So the impact of the health sector on “fiscal sustainability” depends in part on choice
  6. 6. There is nothing wrong with health expenditure growing faster than GDP As long as… • other sectors are not growing that fast (no fiscal imbalance) • spending is efficient (welfare enhancing) • people prefer to spend the additional wealth on health (THEY DO!)
  7. 7. Health is the top priority for more public spending across Europe 0 204060 Health Education Pensions Assisting poor Housing Infrastructure Environment First priority Second priority Source: Life in transition survey 2010, EBRD
  8. 8. Reality check on health spending and its fiscal impact
  9. 9. Health spending increased, but did not carve out an unfair share of growing public spending in the previous decade Source: WHO NHA database, 2012 12.9%12.1%
  10. 10. And this relative increase has faded away in the past 10 years (2003-2012) 12.5% 12.7%12.5% 12.7% 12.5% 12.7% 12.5% 12.7% Source: WHO, 2014
  11. 11. While health has been taking a greater share of public spending in high income countries pre-crisis, it is not the case in less developed countries of the WHO European Region Source: WHO NHA database, 2012 14.4%13.7%
  12. 12. The health sector is certainly not a threat to fiscal sustainability in Hungary…
  13. 13. …or in Malta where health just started to catch up
  14. 14. ...widening gap between health and non- health public spending in Luxembourg
  15. 15. some countries it is clearly not health but other sectors that grow faster than GDP
  16. 16. France cannot decide between health and non-health spending: clearly not sustainable
  17. 17. The Irish decision is pretty clear
  18. 18. Sustainable public financing for health: why and how?
  19. 19. Insurance function and public financing • Let’s not forget the primary reason why health is a big ticket item on the public budget • Public financing achieves better financial protection and equity in access to care i.e. health insurance according to need and not according to ability to pay • User charges do not provide financial risk protection…or equity… and not even efficiency or cost control
  20. 20. Public spending is growing only in high income countries: closing the gap in a generation?
  21. 21. 0 2 4 6 8 10 12 14 Healthexpenditure%GDP public private Private (mostly out-of-pocket) spending is high and growing: bad for health, inefficient and inequitable 0 2 4 6 8 10 12 Low & Lower-Middle income Upper-Middle income High income Source: WHO NHA database, 2010
  22. 22. Unmet need in the poorest quintile Source: EU SILC 0 5 10 15 20 25 30 2007 2008 2009 2010 2011 %ofpopulationin(poorestquintile) Latvia Romania Italy Greece Iceland EU (27 countries) Hungary Belgium Spain How much inequity is “sustainable” in Latvia?
  23. 23. In contrast, counter-cyclical public spending at work in Lithuania 23 0 500 1,000 1,500 2,000 2,500 3,000 3,500 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 planas 2013 m. projektas Total amount of contributions of economically active population, million LTL Total amount of contributions and aditional allocations of national budget, million LTL mln.Lt Source: G. Kacevicius
  24. 24. Avoiding unproductive cost escalation is our joint responsibility: some good options Reduce variation, inappropriate utilization of services through supply side measures Improve rational drug use and price control. Careful with new drugs of marginal benefits Allocate more to primary and outpatient specialist care at the expense of hospitals Invest in infrastructure (including IT) that is less costly to operate
  25. 25. Avoiding unproductive cost escalation is our joint responsibility: some bad options Shifting costs to patients Under-providing health services Spending less on cost-effective services by cutting across the board Leaving it to the doctors to decide and pay them fee-for-service
  26. 26. In summary Health is highly valued by population: spending above GDP growth can be justified Public spending on health needs to grow in low and middle income countries Unproductive cost escalation should be avoided, but cutting spending ≠ efficiency Shifting the burden to patients is a poor alternative to many other options